Pub. 15 2020-2021 Issue 3

NEBRASKA BANKERS ASSOCIATION 19 Since 1857, Cline Williams has devoted attention to the unique needs of the banking and nancial services industries. Since then, we have provided our clients with the resources they need in the areas that are most important to them – from lending and collections, to regulatory compliance, to mergers and acquisitions, and so much more. We’re more than a law rm. We’re a partner for your bank. | | | | | and enhance the resilience of the banking system during stress periods. TLAC buffer requirements were implemented to gradu - ally limit the ability of institutions tomake capital distributions under certain circumstances, thereby strengthening the ability of these institutions to continue lending and conducting other financial intermediation activities during stress periods. Institutions with a TLAC level that falls below the applicable minimum plus-buffer requirements face limitations on capital distributions, in a manner designed to parallel the restrictions on capital distributions under the capital rule. The maximum amount of capital distributions that a TLAC covered company can make is limited as a percentage of its eligible retained in- come, as defined in the TLAC rule. Before the issuance of the March 2020, interim final rule, the TLAC rule generally defined eligible retained income as net income for the four calendar quarters preceding the current calendar quarter, based on the globally systematic important U.S. bank holding companies’ FR Y-9C, net of any distributions and associated tax effects not already reflected in net income. This final rule revised the definition to be: “(i) The eligible retained income of a global systemically important BHC is the greater of: (A) The global systemically important BHC’s net income, calculated in accordance with the instructions to the FR Y-9C, for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income; and (B) The average of the global systemically important BHC’s net income, calculated in accordance with the instructions to the FR Y-9C, for the four calendar quar- ters preceding.” These revised definitions of eligible retained income should allow institutions to gradually reduce distributions as they enter periods of stress and provide institutions with stronger incentives to continue to lend and carry on other business functions. Although both interim final rules were effective as of the date they were published, the new final rule will be ef - fective January 1, 2021.  John S. Berteau serves as Associate General Counsel for Compliance Alliance. He has nearly fifteen years of combined experience in the financial services industry. At Hancock Whitney Bank, he worked in the field of environmental risk management and compliance (CERCLA/RCRA/Wetlands). At Alorica, the nation’s fastest-growing BPO, John worked in tandem with some of the largest banks in the U.S., helping to evaluate financial risks. He holds Bachelor’s and Master’s Degrees in History from the University of New Orleans, a Juris Doctorate from Loyola University New Orleans and is a licensed attorney in the State of Louisiana. In addition to being one of our featured authors, John has recently taken over the editor role for C/A’s Access magazine. As a hotline advisor, John helps C/A members with a wide range of regulatory and compliance